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Mortgage, student loan and credit card debt are all on the rise

As the nation continues its economic recovery, many people in Massachusetts and nationwide are still struggling with high levels of personal debt. New data released by the Federal Reserve Bank of New York shows that consumer debt in the United States is increasing. A big reason for the increase is surging mortgage balances, which increased by $144 billion from the second to third quarters of 2015, reaching a total of $8.26 trillion.

During the same time period credit card debt for U.S. households went up by $11 billion, and student loan debt increased by $13 billion.

The good news is that foreclosures have dropped significantly. They are now at their lowest level in the 17-year period in which the New York Federal Reserve has reported the numbers. The percentage of 90-day delinquencies in home mortgages has also dropped, from 2.5 percent in the second quarter of this year to 2.3 percent in the third quarter. The balances owed on home equity lines of credit also dropped in the third quarter, by $7 billion.

When personal debt becomes overwhelming due to medical bills, unemployment and other financial challenges, an individual may have the right to seek relief by filing for personal bankruptcy. A bankruptcy filing will immediately stop creditor harassment and collection action on most debts. Many forms of consumer debt can be completely discharged by a bankruptcy filing. Once the process is over the individual can make a fresh start financially.

Personal bankruptcy has given countless individuals a second chance. However, it is not always an easy process. Massachusetts residents need to understand how a bankruptcy petition can affect their debts going forward.

Source: DS News, "Mortgage Balances Surge, Fueling Rise in Household Debt," Brian Honea, Nov. 20, 2015

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